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"True Expertise" in Structures - How Do You Tell?

Last month I wrote about the incalculable value of utilizing “true experts”. I described the National Football League’s gruesome experience in trying to run professional football games with a crew of insufficiently trained and inexperienced “replacement” referees. It was a disastrous attempt to save a little money which backfired horribly. Nobody wants “a backfire” in personal injury settlements. Nobody.

I warned readers never to make the same mistake with structured settlements. But so few people know what structures are and how they work, how in the world are you supposed to tell a true veteran from some guy with an insurance license who got all excited hearing that we work with ‘big numbers”?

Well, many settlements do involve “big numbers”, but the size of the case has NOTHING to do with the expertise required to correctly fit structures into a personal injury settlement. Consider the following and ask yourself whether your cousin’s BFF “Fred” actually possesses these skills and this knowledge:

Offer Design: Notice that I said “offer design”, not “annuity quote”. No mere “annuity quote” ever settled a case because proper settlement design involves so much more than mere dates and dollar figures. A true structure pro must have a sound understanding of Medicare, Medicaid, Workers Compensation, special needs trusts, set-aside accounts, and various local statutory programs like New York’s Medical Indemnity Fund. These programs raise important issues which one (or both) of the parties must deal with when crafting a settlement. You can’t just drop a schedule of periodic payments into the middle of all these dynamics without first considering its impact.

Settlement Security: whether a case has been settled for $20,000 or $20 million, all parties need to feel certain that the payments will be made on the dates specified. A true structure pro not only understands how to assess security of the various annuity issuers whose products underwrite most structures, but they are also able to sound the alarm when something unusual has been proposed. The “classic” structured settlement format has endured for very good reasons: few moving parts, all understood, thoroughly vetted and battle-tested. Any time a party wishes to propose alternative funding schemes, they must be carefully evaluated. A decision to stray from the norm must not be taken lightly.

Presentation of Settlement Offers: A true structure pro is not afraid to become involved in the communication of actual settlement offers. In fact, most welcome the chance to clearly describe the full value of structured offers being proposed. Few attorneys or their clients have much training in finance or comparative investment. They also work in an openly adversarial process where confrontation, demand, threat, and counter-threat are all ordinary parts of a day’s work. But sometimes it takes the “softer skills” of listening, patience, restatement, and revision to tease out what’s most important to the settling parties and to convert that into a schedule of benefits everyone can say “yes” to.

Settlement Documents: If you have any lingering doubts about the experience level of the structure professional you are working with, just ask them what the “parole evidence rule” is and why it matters. Part-timers won’t know and they surely won’t understand any of the other sections of your settlement agreement. A structure pro understands that, no matter what the parties may have discussed or intended during negotiations, once the agreement has been committed to writing and signed off on, the legal presumption will be that what is written on those pages IS the agreement, end of story. You have to get it right the first time.

This is why it’s so important that the content of all agreements be correct and that they truly reflect the agreement and intentions of the parties.

At our firm, we not only provide the structure-related content itself; we also review the entire document. We are not a law firm and do not presume to displace any legal guidance being provided by lawyer to client, but it is still amazing how one small “tweak” here or there can alter the meaning of the document and reintroduce a risk which had been specifically and carefully neutralized elsewhere. This is so important that we actually require that two sets of eyes review our clients’ documents to be sure everything is as it should be.

Just Say “No”: Occasionally, what appeared to be a workable settlement in principal at mediation devolves into something unacceptable once you see what that other party actually has in mind. Sometimes there will be disagreement over confidentiality, or how to handle potential Medicare Secondary Payer issues. With structures it could be that one party wants to characterize a non-physical injury as physical in an attempt to capture the full tax exemption which physical injuries qualify for, rather than the tax-deferral available to non-physically injured claimants.

Most often, these issues can be worked out but not always. A true structure pro will not only help you uncover the problem but will also have the courage to express to you their honest opinion about the risk you might be taking by agreeing to the disputed term. Even at a “good price”, some deals are not worth agreeing to.

I have spent the past 25 years working as a full-time structured settlement consultant handling literally thousands of cases. Each case has been individually crafted and meticulously reviewed and executed. My most experienced clients call me on every case they structure.

Want to work with a true expert? Call me: Frank C. Kilcoyne CSSC at 800-544-5533, I am here to help.